Hey there, BP! Have you ever found that some real estate agents are reluctant to work with investors? They think we are a pain in the rear, too picky, not worth the trouble, etc. Well, some of us actually are a pain in the rear. However, if real estate agents were willing to work with us and learned how to support us more effectively, we’d BOTH make more money!

For today’s article, we have a treat for you. My associate Karl is a seasoned real estate broker and has agreed to “sit” for an interview. As you will see, he has many years of experience in working with investors and a unique perspective on the real estate agent/investor relationship. I really enjoyed creating this interview with Karl, and I hope you find value!

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A Conversation With a Real Estate Broker

1. Tell us a bit about your background in working with investors as a real estate broker.

I’ve been licensed for 19 years and have had extensive experience working with investors as an REO broker, as well as a regular residential real estate agent. As such, I’ve had hundreds, if not thousands of experiences with investors of all stripes from across the country.

2. Why do you think some agents are leery to work with investors?

It’s a pretty complicated answer, but I believe the easiest way to explain it is that agents by and large are not taught about the various forms of creative real estate, and as such, they are hesitant to get involved in transactions that do not appear to have any immediate payoff.

Most times, agents don’t know what “wholesaling” is. We call it “assignment of contract.” So when a newer investor wants to meet a newer agent for their investing needs, the newer investor typically uses the wrong language when they talk to the agent, and this starts the downward spiral.

I know this seems simplistic, but in my mind, many times, it is simply a communication issue. Both parties want the same thing — a closed transaction. However, the agent will feel like, as the “real estate professional,” their skills and training are somehow superior to that of an investor.

Conversely, the investors that I’ve met typically are taught by other “older, wiser” investors to avoid agents. Many times, these newer investors also suffer from the same malady that a newer agent has…”Know-it-All-itis.”

With both parties knowing a different skill set within real estate, they begin to interact.

The real estate agent assumes that the investor will operate the same way a regular residential buyer will act, and the investor acts as if the agent will somehow “forget” their residential resale training.

This leads to a vicious, self destructive cycle. Both parties could help each other, if they could only learn how to communicate effectively. It is similar to one person knowing Latin, and the other person knowing Spanish. They have a lot of similarities in terms of structure, word etymology and pronunciation. Yet those speaking these two languages are completely unable to fully communicate. This is the problem.

4. So tell us how investors can help agents.

As a broker and a real estate agent/investor myself, I think of the agents that I have mentored or coached over the years. They have the same basic problems and concerns that an investor would have. They are always looking for leads to list. As investors, you are always looking for leads to buy. The good news is that these two goals are not mutually exclusive. Many times, the very leads you generate as an Investor may not work for you for one reason or another. Most of the time, you let these leads fall by the wayside. If they are unable to accept your wholesale deal, you throw it away.

My thought? Use those potential leads as bargaining chips with your agent to create a mutually beneficial result! By giving those “useless” leads to an agent, that very agent can return the favor by supporting the investor (i.e. comparable assistance, contract help, negotiation advice), and therefore an investor can create a great relationship with a like-minded real estate agent.

5. So why would a real estate work with an investor, particularly wholesalers?

Undoubtedly, you have heard, “When you see the herd go one way, go the other.” With this in mind, understand that there is a huge segment of the population in your town that is interested in real estate, particularly as investment property. As a real estate agent, you are taught early on in your career to build a “Center of Influence.” By considering investors (particularly wholesaling ones) as part of your Center of Influence who buys property occasionally, you can manage them more easily, as well as potentially have them as referral sources.

6. Karl, you used the term “Center of Influence.” Can you tell us more about that?

Well, if you were going to come and work for me in my office, your first job as an agent would be to build what is called in our business your “Center of Influence.” It is similar to an insurance agent’s “Book of Business.” Unlike a Past Client database of previous customers, this “Center of Influence” is a section of your overall database that is comprised of people who know, like or who trust you.

By consistently working with investors and adding them to your “Center of Influence,” you create long term, repeatable business. This Past Client and Center of Influence database is really the only thing you have to sell when you retire as an agent.

7. So how would an agent go about attracting and qualifying investors?

Fortunately, that is the easiest part! There are tons of investors and potential investors in your marketplace. Unlike residential retail buyers, investors many times are much easier to work with IF you maintain control (this is the key operative term). You see, you must understand that some investors will just never see things your way and will never change their opinions on things. Others who are newer are more coachable in terms of strategy, negotiation, and pricing. If you understand this, you will go a long way to having a great relationship with investors.

There are several methods to attract these newer investors. One of my personal favorites is using MeetUp groups. MeetUp groups allow you the flexibility of making a mass presentation, and the control of organized training. You see, the biggest thing that I’ve found to be true with wholesaling investors that has helped me is the fact that they are so much like newer agents. They have the same questions, the same problems, and the same issues you have as a real estate agent. By organizing a MeetUp group and advertising it as a free educational event for investors with a speaker on some topic (say, HUD properties), you are sure to attract a lot of newer, hungrier investors.

This allows you to educate them “en masse” and without cost or much time. You can make a short presentation prior to the speaker about your willingness to help them with contract questions, comparables, “what if” scenarios, and more. This will position you as the “authority” or “go to” person for the newer investor. This strategy is particularly effective because if wholesaling investors suffer the same fate as a real estate agent ordinarily does (only one in five real estate agents are in business after five years), then it is highly likely that this wholesale investor will be out of the business within 18 months.

As such, it makes sense to put yourself in the right place at the right time. These investors, although temporarily out of the game, are still on the lookout for property. They will tell you about deals they find out about, if you ask. Again, as part of your Center of Influence, make follow up calls.

8. What costs and time are associated to working with investors?

With the “MeetUp group” strategy, there is very little time and almost certainly no cost to conduct such a seminar. If you have been an agent for any length of time, you are familiar with a buyer seminar. You conduct this MeetUp group the same way. Make it a monthly event, and you will quickly discover that the word gets out about you being “investor-friendly.”

Certainly, with the advent of the Internet, there are literally thousands of places to go online to connect with others who are real estate agents who specialize in working with investors. Sites like BiggerPockets provide ample forums to meet local investors in a free, non-invasive way. Facebook provides tons of local groups of investors who are always happy to hear about an “investor-friendly agent.” The possibilities are simply endless with the Internet today.

9. So bottom line, how can the agent/investor relationship double the agent’s income long term?

Well, that’s really the key. It is two things: a “relationship” and “long term.” The problem is, most agents are so focused on the right now that they miss the bigger picture. Let’s just suppose a newer wholesaler brings you a “crazy idea” about “flipping houses with no money, and selling it before they close…”

Before you throw them physically out of the office, simply ask a few more qualifying questions! Are they looking to “wholesale” a property? (Which in real estate agent speak, we know as “assignment.”) If so, then simply understand that they need education, and if you can spend a little time educating them, you can add them to your Center of Influence. As they mature as an investor, they will become a valuable referral partner to you. Not every property needs to be listed, not every property is an investment property. Both parties can help each other serve their community if they communicate and work together!

Did you enjoy this article? Then be sure to share it with a real estate agent in your area! You just might build a new strategic alliance with them.

Be sure to leave a comment below to get some conversation going!

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About Author

In 2005, Matt founded The DeRosa Group along with his wife, Elizabeth. At the time, the two person company owned and managed two assets – a single family home and a duplex. Over the last nine years, they have grown the company to a 12 person team owning and managing over five million dollars in residential and commercial assets throughout the central NJ and Philadelphia area.
One of DeRosa’s mantras is “to make money while making a difference.”

25 Comments

As an agent and investor, I can say that this article is 100% accurate. I love that you took the time to interview Karl, and that he took the time to share. The relationship between investor and agent should not be adversarial at all, and I couldn’t believe the attitudes of agents I encountered before I became one.

I had paid cash for a house, and asked the same agent if they had any more like it. Her response? “I can out you on our mailing list…” ?!? I was barely 30 and had just paid cash for a house. You sell houses, I buy houses. We should be friends… Turns out, she only ever sold me that one house. But the next guy understood, and he sold me four.

Hey Mindy!
Thanks for reading and for sharing your experience! I really appreciate it. I have worked with agents that get investors and those that don’t. The ones that get it get a lot of business from me and my friends!
Take care,
Matt

I had grown to dislike agents, they are know it all’s, arrogant, boneheaded and disrespectful. And that’s their good points. Recently I asked an older female agent to find me fixers. She asked what price range, I told her under 50K. She laughs and replies, you cant find those anymore. I told her I just flipped 20 in the last 18 months. She didn’t seem impressed and probably thought I was lying. I never heard from her.
However now I’m softening up a bit.
I just slammed my first deal with an agent and made $12K
And now what’s really crazy is my main buyers are Realtor Brokers that wholesale my deals to their buyer pool.
Yes, I’m all for working together to make our lives more profitable. It’s an uphill battle, but, it can work.

Hey Randy,
Thanks for reading! I can’t believe some agents, but am not surprised that the first one scoffed at you and didn’t believe the deals you were doing. It would be tempting to send them some copies of contacts proving to them that people actually do deals that are not at market rates! Maybe then she would believe you, LOL.
It is good to hear that there are agents that get it in your world. I hope you are able to do a ton of deals with them!
Take care,
Matt

Congrats on your sale! That’s a biggie! Unfortunately, not all agents are as “progressive” or thoughtful in their approach. Many times, agents get locked into one train of thinking.. much like we all do on various things..

The good news is, you have discovered the untold “secret” of Investors who are also Realtors® like myself who invest…

In my experience, most real estate agents are too stuck in the homeowner mindset. But there are a select few who understand investors. Those few understand that it’s a volume game and they will need to make a lot of offers, but they could get a large number of commissions from one client. The one we work with also has experience in construction, which is very rare, but great as he can help us with the rehab analysis and understands our criteria.

Hi Andrew,
Thanks for reading. You hit the nail on the head – investors are the one client for a realtor that could buy more than one property per year. I also agree that finding a realtor that has any knowledge at all in construction is rare. I am willing to teach them, and have done so in the past in the name of giving them more tools to help me.
Matt

Couldn’t be more spot on. I can’t imagine why working with investors wouldn’t be on the top of an agent’s priority since investors are great sources of repeat business. We’ve worked with a few agents who had their own agendas and pushed properties onto us as investors without doing any due diligence in the properties. These same agents became upset and frustrated when we kept passing on various properties because the numbers didn’t work for us. The agents who understood how we operated worked out well because they knew they would earn commissions both on the acquisition and sale side. These agents had a “increase the pie” mentality that worked out well for all parties.

Hey Jesse,
Thanks for reading and for the comment. It’s funny that your agent kept pushing deals that didn’t work over and over. I’ve seen the same thing. If you notice, a lot of the time the deals they are pushing are their own deals meaning they represent the owner also. Always looking for that double commission, LOL. It’s so much better to look at the long view and keep an investor happy so that they funnel all their purchases and sales your way.
Matt

Some real estate agents are swamped with advertising and networking and often forget that furthering their education. It is amazing to me how many real estate investors are looking for real estate agents to work with and are all to frustrated with the lack of knowledge RE agents have on the REI way of doing things. When I meet a new real estate agent I try to invite them to the meetup events I attend to help them see that there are a lot of ways to make money in real estate if you partner with the right people and educate themselves.

Hey Tasha,
Thanks for the comment. We as investors need to educate realtors to our needs. We are so different than all their other buyers, in so many ways. It’s an entirely different approach to a transaction. Some are willing to learn and take their blinders off!
Take care,
Matt

I got lucky and love my agent. She had sold me my last few personal homes, it was natural that I call her when I decided to start investing. But I quickly understood that if this was going to work out, it needed to be a partnership. She is very patient with showing me many properties and writing ALOT of offers that don’t get accepted, and I’m very aware that the properties I do end up buying don’t net her much of a commission. But she also knows that I speak well of her to others needing an agent whenever possible, and has gotten several good referrals from me. In short, I try very hard to be considerate of her time and use it wisely, and she understands that when a good property hits the market, she needs to show it to me yesterday. We even have done joint marketing– I get the sellers that fit my profile, she gets the listings that don’t. With her help, I’ve purchased five rental properties in the last few years. Some have been through the MLS, some were deals I found myself, she handled the sale and paperwork for a fee. It’s been a great journey for us, me learning how to be an investor, my agent learning how to work with one.

Great read here.
I don’t seek out agents but have had several eager to try to do work together.

Unfortunately typical pattern is they send off like half a dozen dud deals and get frustrated and fall out of contact.
Some last a bit longer and will enthusiastically put in several well below asking price offers but get frustrated then same fate as above.

Some have toughed it out and made some sales. However the much bigger payoff these guy got were building a relationship and gaig NY trust.

Sorry phone started acting weird when I tried to erase a stupid auto correct.

Last part there was saying that the best part for those agents is that since we had built a relationship and I trusted them they got some listings for rehab resales in their area that they had nothing to do with acquiring but I felt they would do a good job for me.

That’s good that you keep swinging! Good Realtors® are just like good Investors. There are some really really good ones, and some really really bad ones! The great news about the good Investors and the good Realtors® is that they frequently find each other and dominate the marketplace!

I had the pleasure of working with “investors” who were straight out of “guruville”. They found $25,000 properties on Zillow that had been lingering for 90+ days and wondered why I didnt think they were a good deal. They thought that since they had just been to a bootcamp, that they were better than all of those that had been in the game for years.

I appreciate you telling us your thought on that Pat! I am guessing that you are talking about perhaps “wholesalers” who have recently bought a course or something like that.

I can totally appreciate where you are coming from. There are some, (who like we Realtors® must admit) are jerks… and that’s totally okay.

They can be jerks to anyone they want to… but me. However! There is a LARGE contingency of Wholesalers out there that are generally honest, good hearted, well intentioned folks that just need a little direction.

As I pointed out in the interview, one of the best ways you and I as Realtors® can capitalize on this is to accept these newer investors as “Centers of Influence” subject to the same prequalification rules you have for any other buyer.

Some buyers deserve “A+” Level treatment. They are the ones who perform, who buy, who are willing to listen, and work with you.

Some buyers deserve “B” level treatment. You educate them, groom them, and help them realize the realities of the market.

Some buyers deserve “C” level treatment. These are the least involved in the actual sales process. You spend very little time with them.

AS An Agent myself,I can understand where the opinions and experiences are coming from. For the investor seeking to work with Agent(s), I would:

(1) want to find out if the agent had any experience working with investors, what strategy his past investor clients were using ( buy n hold guys, flippers, new construction)

(2) After per-screening potential agents,meet over coffee and explain exactly what you are seeking to accomplish.Let them know it will involve putting lower offers and may take a while to get that 1st deal accepted. That way realistic expectations are set

(3) You may have to do this couple times until you find the right Agent willing to work with you.

But as @PatrickJacques has said, someone just off “guruville” with “grandiose” ” the next best strategy” ideas will get no time from the agent

In my experience investors rub many agents the wrong way. Never want to pay full commissions, low-ball everything, discount your expertise, demand the world and on and on. I personally think there are far worse people to deal in real estate with. Love this topic though! Thanks for sharing